On December 12, 2013, the U.S. District Court for the Northern District of California ruled in Rollins v. Dignity Health that a pension plan sponsored by a large tax-exempt health care system does not satisfy ERISAs exemption for church plans.
In denying Dignity Healths motion to dismiss, the court rejected the committee model for church plan sponsorship, which is relied upon by a number of tax-exempt organizations such as hospitals and universities that are affiliated with churches. The court agreed with the plaintiffs contention that while a church-affiliated entity may maintain an ERISA-exempt church plan, only plans established directly by a church or convention of churches qualify as church plans. This case has important implications for sponsors of church pension plans that are not churches and rely instead on the committee model.
